PLAN FOR ELLIS ISLAND DEVELOPMENT STILL IN QUESTION

By MARTIN GOTTLIEB

Published: July 8, 1986

Even amid the euphoria of Liberty Weekend, officials continued debating one unanswered question of the Statue of Liberty-Ellis Island restoration effort: what to do with the former hospital buildings and wards on the 17 acres of Ellis Island nearest Liberty Island.

One proposal for the buildings, which are severely deteriorated, calls for rehabilitating them as a privately financed conference center that would provide tourist accommodations in the summer. The National Park Service favors this plan.

A second proposal, calling for what has been characterized as an ''ethnic Williamsburg,'' originally proposed demolishing many of the buildings. A revision of that plan would save the buildings and add a large new structure to display immigrant contributions to this country.

Other plans for the site, which is separated by a ferry slip from the Great Hall of the island, have mentioned an arts center, an Immigration and Naturalization Service training center, and replacing the buildings with a park.

The debate at times has been so explosive that Lee A. Iacocca, the chairman of the private foundation that has raised $277 million for the rebuilding, blames it for his dismissal as chairman of a Federal advisory commission considering the issue. Interior Secretary Donald P. Hodel, who dismissed him, disputes this. Planning Called Difficult

''I think planning for Ellis Island is as difficult as shaping immigration policy,'' said the National Park Service's project manager for Ellis Island, Michael Adlerstein.

''Unlike the Statue of Liberty, which has clear unstainable symbolism as standing for liberty and freedom and so many of the things we don't question, Ellis Island represents the steerage class immigrant,'' Mr. Adlerstein said, ''and I think Americans, like citizens of all countries, have always maintained ambivalent feelings toward immigrants.''

Over the last 30 years, the Government has rejected more than 50 plans to sell Ellis Island or to use it for purposes ranging from a drug treatment center to time-share condominiums.

A consensus has been reached over its core - the northern 10 acres that include the Great Hall. The Hall, designed at the turn of the century by the firm of Boring & Tilton, is being restored with more than $100 million from the Statue of Liberty-Ellis Island Foundation and will house a museum.

As for the rest of the island, Armen G. Avedisian, a businessman appointed by Mr. Hodel to replace Mr. Iacocca, said: ''Many people look upon Ellis Island as a shrine, and they wish and they hope that nothing is done to detract from what it stands for as a national symbol of immigration. They don't want commercialism.'' Plan Wins Competition

One focus of the debate is whether the development on the hospital site should be self-sustaining, such as the proposed conference center, or a public attraction, such as the proposed exhibition center.

In 1982, the proposal for the conference center won a Park Service-sponsored competition for private development of the island's southern half. Some original features, however, including a swimming pool and a marina, were removed from the plan.

The $75 million plan, by a New York-based group called the Center for Housing Partnerships, now calls for 300 hotel rooms and two dozen conference rooms, financed through a combination of Federal grants, bank loans and tax shelter investments possible under the Historic Preservation Act of 1981.

Widely endorsed by area Congressmen and groups concerned with Ellis Island, the conference center would be operated by universities not yet chosen.

In 1983, before Interior Secretary James G. Watt could act on the Park Service choice, Mr. Iacocca, newly named to head the Federal advisory commission, asked that the panel be allowed to consider alternatives. Iacocca's Reservations

Mr. Iacocca soon voiced strong reservations about the plan, which he described as ''a tax break for the rich'' and ''a luxury hotel'' that would exclude tourists from much of the island. He also said the plan had been chosen under criteria designed more to free the Park Service from extra expense than to result in the best possible use for the island.

But Herbert Cables, regional director for the Park Service, said, ''There was never an intention to have a grand, lavish hotel facility over there.''

Mr. Iacocca asked the architect John Burgee to develop a concept in which financing was no obstacle. The plan, which has gone through several changes, now calls for building a large glass exhibition hall on a quadrangle between the wards and hospital buildings. With the exhibits in the Great Hall and those in the new building, Mr. Burgee said at a recent public presentation, Ellis Island would reflect the entirety of the nation's immigrant experiences ''right up until today's immigration problems.''

The plan is estimated to cost from $100 million to $150 million, but the prime potential source of financing -Mr. Iacocca's ability to raise funds -dried up after he was dismissed. Mr. Iacocca has said he is no longer interested in getting directly involved on the south side of the island.

Meanwhile, critics have attacked the Burgee plan as heatedly as Mr. Iacocca has attacked that for the conference center. They say, among other things, that it would destroy the sense of place on the southern half of Ellis Island and that its exhibits of ethnic arts and industries would be contrived versions of what exists on the streets of New York and elsewhere.

At a harmonious meeting Saturday, the 50-person commission, made up largely of business people, agreed to move slowly and to establish precise criteria by which to make a choice that will be submitted to Mr. Hodel, possibly within the year.